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Saturday, 30 March 2013

USA & Australia Public v Private battle over money supply system.

National Banking: Securing
the Common Good

July 2012

By Robert Barwick

National banking is the
means by which governments can direct public credit into developing
the physical economy of the nation. It is the government’s
responsibility to raise the living standard of its citizens, anchored
upon infrastructure projects for advanced power, water,
transportation and health and education systems. These cumulatively
serve as a “platform” for the development of the high-technology
manufacturing and agricultural industries that ensure the economy’s
ability to meet human needs.

From the time that France
in the 15th century emerged from the feudal dark ages of Europe as
the first sovereign nation-state in modern history, good monarchs
such as France’s Louis XI (142383) used their wealth and power to
organise their kingdoms for the good of all their people—the
“Common Good” as Louis XI called it. This was the purpose for
which the American colonies launched their 1776-81 revolutionary war
against the British Empire, and which they sanctified in the “General
Welfare” clause specified in the Preamble to the U.S. Constitution,
which governs the interpretation of any particular clauses within
that constitution. Our Australian Labor Party was founded in the
1890s upon that American precedent, even taking the American instead
of British spelling for “Labor” to declare their commitment to
what they called the “Common Good”.

But such governments
committed to the Common Good threatened the system of empires, a
world order that stretched back to Babylon and even earlier, whereby
a tiny ruling oligarchy controlled private monetary systems for their
own benefit, and to control the masses of the population. From A.D.
1000 on, such empires were successively headquartered in Venice,
Amsterdam, and then London. They wielded enormous power through
privately owned central banks, stock markets, and their domination of
world trade through such global, genocidal behemoths as the Dutch and
British East India Companies, both of which continued Venice’s role
as the hub of world trade, and its command of the world’s gold and
silver bullion markets.

The American Founding
Fathers overthrew that ancient oligarchical system, to establish the
first republican system of government in the world, declaring the “general welfare”
of all citizens as the raison d’être of the state. To establish
their new government and secure the commitment to the general
welfare, the Americans established the institutions of public credit
and national banking as the bedrock of their republican system of
government.

Alexander Hamilton

The American experience
provides clear proof that the principle of national banking and
public credit is inseparable from national sovereignty. Britain’s
imperial rule was based on its monetary empire, centred in the
privately owned Bank of England and British East India Company. The
Massachusetts Bay Colony challenged this system already in 1652, by
establishing its own mint to issue its own currency— the Pine Tree
Shilling. Though issued in silver, that currency was not based on the
value of gold or silver bullion (whose world supplies and prices were
controlled by the Bank of England and the BEIC), but by the colony’s
ability and intent to develop its physical economy. Typical was the
Colony’s construction of the Saugus Iron Works, the world’s most
advanced such industrial project at the time. The British Empire not
only forbade such sovereign control over the colony’s fi nance, but
revoked the Massachusetts Bay Company’s self-governing charter in
1684 and sent in a British military governor to rule the colony.

But American patriots led
by Benjamin Franklin continued to advocate a sovereign currency
system, as did Franklin in his 1729 A Modest Enquiry into the Nature
and Necessity of a Paper-Currency. Franklin, a scientific genius
hailed the world over for opening the door to man’s control over
electricity, as well as a political leader, taught America’s
Founding Fathers that only a sovereign system of credit could secure
the political sovereignty for which they launched their revolution in
1776. General George Washington’s young aide-de-camp, and later
inaugural Secretary of the Treasury, Alexander Hamilton, conceived of
a system of public credit both to fi nance the war, and then to
consolidate the American victory. Even as victory hung in the
balance, Hamilton wrote to his key collaborator, the financier Robert
Morris, about what was required to win fi rst the war, and then the
peace:

“A plan must be devised,
which by incorporating their means together, and uniting them with
those of the public, will, on the foundation of that incorporation
and union, erect a mass of credit that will supply the defect of
monied capital, and answer all the purposes of cash; …in its
progress, have the most benefi cial infl uence upon its future
commerce, and be a source of national strength and wealth. I mean the
institution of a National Bank.

“The tendency of the
national bank is to increase public and private credit.... Industry
is increased, commodities are multiplied, agriculture and
manufactures flourish, and herein consists the true wealth and
prosperity of the state….

“It is in a national
bank, alone, that we can find the ingredients to constitute a
wholesome, solid, and beneficial paper credit.” (From Letters to
Robert Morris 1779-1781.)

Hamilton’s plan became
the Bank of North America, which was indispensable to winning the
revolution. But even after signing the Treaty of Paris in 1783, the
formal peace between the new American republic and Britain, the
British continued their aggression through other means: by trade and
currency warfare against the thirteen American colonies, all of which
had been bankrupted by the war, leaving their sovereignty still in
peril. But in 1789, following the ratification of the U.S.
Constitution and the inauguration of the newly constituted federal
government, President Washington appointed Hamilton as his Treasury
Secretary, to organise a public credit system as the bedrock of the
new nation.

Hamilton’s first act was
to establish the public’s faith in the credit of the U.S.
government by issuing an ironclad guarantee that America would honour
all of the debts which its colonies had contracted to win the war,
and not to just cancel them, as many had called for because their
magnitude made their repayment appear impossible. Hamilton insisted,
instead, that such loans were the “price of liberty”, and must
therefore be honoured by the new nation. He floated new loans to pay
back the original debts, but directed the newly-expanded currency of
which those loans were comprised in such a fashion as to be able
ultimately to extinguish them: the expansion of America’s physical
economy, its infrastructure and industries, would generate the
revenue to repay the debt.

Thus secured, certificates
of U.S. debt became a paper currency that could be exchanged for
goods and services, which the public valued equally to gold and
silver coins; but supplies of the latter were limited, and they were
always subject to financial warfare by the British, who controlled
the value and supplies of gold and silver, as had the Dutch and
Venetians before them. In three groundbreaking reports to the U.S.
Congress—the January 1790 Report on Public Credit, December 1790
Report on a National Bank, and December 1791 Report on Manufactures—

Hamilton elaborated his
intent to develop the physical economy of the United States as the
very essence of national sovereignty.

So informed, the U.S.
Congress in 1791 passed Hamilton’s legislation to establish a
national bank, the First Bank of the United States. Its defining
feature was that specified in his Report on Manufactures, that “the
creation of a debt should always be accompanied by the means of its
extinguishment,” i.e., that public credit would be harnessed to
develop the physical economy of the new nation. Less than twelve
months after its establishment, Hamilton in December 1791 reported to
Congress on the beneficial impact the bank had already had.

“Industry in general
seems to have been reanimated,” he said, and “there appears to be
in many parts of the Union a command of capital, which till lately,
since the revolution at least, was unknown”.

By securing the
national debt upon an expansion of the real physical economy of
infrastructure, and of agriculture and industry, Hamilton explained
that that apparently huge debt had become a “public blessing”, in
that its certificates served as a reliable, expanded money supply.
They were as “good as gold”, and so facilitated a still further
expansion of the new nation’s physical economy.

The British Empire Strikes
Back:

Aaron Burr and Wall Street

Humiliated by its defeat
and panicked that America’s republican constitutional and public
credit principles would unleash similar revolutions on the European
continent and around the world, the British Empire schemed to crush
America’s sovereignty from within and without. One of their chief
agents was Aaron Burr, who established the private Bank of Manhattan
in 1799 on Wall Street— already then a hub of British-backed
private financiers and slave- and opium traders—to attack
Hamilton’s national banking policies.3

In 1804, the expert
marksman Burr assassinated Alexander Hamilton in a provoked duel.
Soon thereafter, Burr wrote to the British Ambassador to Washington
to offer his services to split up the United States by organising
sectional rebellions, for which he was tried for treason in 1807. He
fled to Britain, where he stayed in the home of Jeremy Bentham, Lord
Shelburne’s chief intellectual hired gun and the British East India
Company’s ideologist.

In 1811, Britain’s
agents in the USA ensured that the 20-year charter of the First Bank
of the United States was not renewed. Then came the War of 1812, in
which Britain invaded and burned down Washington, D.C. before being
defeated once again.

In the absence of a
national bank, the British once again launched all-out trade and
financial warfare against the American republic, as Bentham’s
associate Henry Brougham (later Baron Brougham and Vaux) bragged of
this warfare in a famous speech in the House of Commons on 9 April
1816, which included Britain’s “free trade” dumping of every
conceivable product upon America, even at a loss, to wipe out
America’s domestic manufactures: “Every thing that could be
shipped was sent off; all the capital that could be laid hold of was
embarked. … it was well worth while to incur a loss upon the fi rst
exportation, in order, by the glut, to stifle in the cradle those
rising manufactures in the United States, which the war [of 1812] had
forced into existence contrary to the natural course of things.”
The “natural course of things” meant that the British planned to
keep America as merely a weak raw materials producer for the
Empire—precisely as they have done to Australia today.

In disguise, Burr snuck
back into the United States during that war to continue Britain’s
financial and political subversion of the young republic. With no
national bank, and after five years of financial chaos pivoted upon
British economic warfare, the U.S. government in 1816 chartered the
Second Bank of the United States along virtually identical lines to
the first. It stabilised the financial system, and provided the means
for an extraordinary economic development program of steel
manufacturing, railroads and canals, called “internal
improvements”.

National banking,
combined with Hamilton’s other major policy initiative of high
tariff protection to foster manufacturing, became known worldwide as
the “American System”, in opposition to the “British System”
of free trade and privately controlled “central banks”.

In 1832, future president
Abraham Lincoln based his election campaign for the Illinois
legislature on his support for the American System. “I am humble
Abraham Lincoln,” he said.

“I am in favour of a
national bank, the internal improvement system, and a high protective
tariff.”

Elected president in 1860,
on the eve of the British-sponsored Confederacy’s declaration of
succession and resultant civil war, Lincoln revived the American
policy of public credit by issuing the famous “greenbacks” to
finance the war, following the refusal by Wall Street financiers to
make loans to the U.S. government to suppress the Confederate
rebellion. In the midst of that existential crisis for the American
republic, Lincoln delivered his immortal Gettysburg Address, in which
he dedicated the site where the Union had won a crucial battle
against the Confederacy, to the purpose for which he was leading that
war: to ensure the continuance of the American System, that

“government of the
people, by the people, for the people, shall not perish from the
earth.”

As the British had feared,
the American System inspired people all over the world to desire
sovereignty, including among Britain’s own colonial dominions. In
Australia, the Rev. Dr. John Dunmore Lang enthusiastically championed
American-style republicanism in his 1852 book, Freedom and
Independence for the Golden Lands of Australia. To head off this
potential, the British fabricated a democratic reform which they
called “responsible government” (actually, a parliamentary façade
of handpicked members of the British-created “squattocracy”),
behind which the oligarchy’s private control over the financial
system remained intact.

This was the typical
British system, as summarised by in 1852 by British Chancellor of the
Exchequer and future prime minister William Gladstone: “The hinge
of the whole situation was this: the government itself was not to be
a substantive power in matters of Finance, but was to leave the Money
Power supreme and unquestioned.”

National Banking in
Australia:

the Commonwealth Bank

Many other nations took
their lead from the United States and employed various forms of
public credit institutions for directing economic development;

Australia went so far
as to establish a dedicated, Hamiltonian-style national bank—the
Commonwealth Bank of Australia. In two distinct phases, from its
inception in 1911 to 1923, and then from 1942-49, the Commonwealth
Bank proved the power of national banking: it directed the public
credit of Australia into the development of great infrastructure and
crucial industries, including the Trans-Australian Railway; it financed Australia’s participation in WWI; and it financed the
miraculous war-time economic mobilisation of WWII which transformed
Australia from an agrarian backwater into an agro-industrial
powerhouse, including the postwar great Snowy Mountains Scheme. Just
as in the United States, the rise and fall of the Commonwealth Bank
is the story of Australia’s battle for national sovereignty.

The American-inspired
patriots of colonial Australia who fought for nationhood knew that
national banking was the determining issue. Australia’s labour
movement was born out of the bloody 1890 maritime and shearers’
strikes against the London banks, pastoral houses and shipping
companies that controlled the
colonial economy, and whose stranglehold would unleash the
devastating crash of 1893. Already in 1891, NSW’s Labor Electoral
League, one of the components which would form the Australian Labor
Party, enshrined a commitment to national banking in its electoral
platform, alongside a demand for“The federation of the Australasian colonies upon a national as opposed to an imperialistic
basis….”

It was the expatriate
American ALP politician King O’Malley who gave the Labor Party its
deep appreciation of the workings and the signifi cance of national
banking. In 1908 O’Malley convinced the federal Labor Party
conference held in Brisbane to adopt a detailed national banking
proposal in its fighting platform. In a five-hour speech in
Federal Parliament the following year, O’Malley emphasised the
importance of a national bank for Australia’s sovereignty:

“We are legislating
for the countless multitudes of future generations, who may either
bless or curse us. … We are in favour of protecting, not only the
manufacturer, but also the man who works for him. ... I propose the
institution of a government national bank for managing the finances
of the Commonwealth and the States. … Cannot honourable members see
how important it is that we should have a national banking system …
—a system that will put us beyond the possibility of going as
beggars to the shareholders of private banking corporations? The
movement of the money volume is the vital monetary problem—the
master-key to the financial situation. Through the control of this
movement prices may be made to rise or fall or remain substantially
steady. … Such power is an attribute of sovereignty … and ought
to belong to none but the sovereign people exercised through …
Parliament and Government in the interests of the whole people.”

O’Malley triumphantly
proclaimed the precedent for his proposed new national bank. “I am
the Hamilton of Australia”, he declared. “He was the greatest
financial man who ever walked the earth, and his plans have never
been improved upon. … The American experience should determine us
to establish a national banking system which cannot be attacked.”

Labor vs. the Money
Power

To force the ALP caucus
to implement the national banking policy, over the opposition of
Melbourne’s British-controlled Collins Street banks, O'Malley
formed what he called the “Torpedo Brigade” among Labor MPs.
O’Malley and his allies pushed through the Commonwealth Bank Act in
December 1911, and O’Malley personally handpicked Denison Miller to
run the new national bank, exhorting him, “You have a chance to
make history, Brother Miller, Australian history, which will become
world history. Think the matter over deeply. And accept the job.
Decide to make history— I’m sure you’re the man to do it.” In
his 1962 book, The Great Bust, former New South Wales Treasurer and
later NSW Prime Minister Jack Lang documented the terror which Miller
and the Commonwealth Bank had struck into the British oligarchy,
until Miller’s untimely death in 1923:

“In Australia the war
had been financed by the then newly established Commonwealth Bank. It
had found all the money to keep the armies abroad, and also to
finance the producers at home. It had financed the Commonwealth
Shipping Line deal for Hughes. Denison Miller had gone to London
after the war had finished and had thrown a great fright into the
banking world by calmly telling a big bankers’ dinner that the
wealth of Australia represented six times the amount of money that
had been borrowed, and that the Bank could meet every demand because
it had the entire capital of the country behind it. The Bank had
found £350 million for war purposes. A deputation of unemployed
waited on him after he arrived back from London at the head office of
the Commonwealth Bank in Martin Place, Sydney. He was asked whether
his bank would be prepared to raise another £350 million for
productive purposes. He replied that not only was his bank able to do
it, but would be happy to do it. Such statements as these caused a
near panic in the City of London. If the Dominions were going to
become financially independent of the City of London, then the entire
financial structure would collapse.”

Lang went on to
describe the City of London’s intention to bridle the Commonwealth
Bank, by creating a supranational banking structure that would take
control over the finances of all nations, constituting a de facto
world government. The subjugation of the banking system of Europe
today, under the European Stability Mechanism (ESM) demanded by
London and related financiers, is a dead ringer for the process
exposed by Lang:

“Basically it was a
problem of banking. Some formula had to be devised which would enable
such local institutions as the Commonwealth Bank of Australia to be
drawn into the City of London’s net. The financial experts studied
the problem deeply. Out of their deliberations emerged the plan to
centralise the control of all banking throughout the Empire by
channeling it directly into the supervision by the Bank of England.
The Bank of England was to become the super Bankers’ Bank. … The
Bank of England took up the idea of Empire control most
enthusiastically. It was even decided to aim at a World Bank, to be
run by the League of Nations, which would control the credit of the
world. The grand idea was that one single Board of Directors would
make the decisions which would determine the economic policy of the
world. The bankers were to be the supreme rulers. Naturally, the
Governor of the Bank of England expected to be at the apex of the
system. If, for example, the Bank of England could control the
Commonwealth Bank of Australia there should be no impediment in the
way of controlling the government of the country as well. … The
death of Miller removed at a critical moment the one man capable of
defending the citadel of Australian fi nancial independence.”

Notwithstanding the
remarkable accomplishments of the Commonwealth Bank, its mere twelve
years of operation, before private financiers seized control of it
following Miller’s death, were not enough for the Bank to break the
British monetary stranglehold on Australia. Frank Anstey, one of
O'Malley’s former Torpedo Brigade members and the mentor of future
prime minister John Curtin, showed in his 1921 book, The Money Power,
that the issue was understood to be national sovereignty:

“Australia is a mere
appendage of financial London, without distinct economic existence.
... London is, so far, the web centre of international finance. In
London are assembled the actual chiefs or the representatives of the
great financial houses of the world. The Money Power is something
more than Capitalism. ... These men constitute the Financial
Oligarchy. No nation can be really free where this financial
oligarchy is permitted to hold dominion, and no ‘democracy’ can
be aught but a name that does not shake it from its throne.”

Indeed, when Miller
died in 1923 the London banks directed the Australian government to
hand control of the bank to a board of private businessmen, who
promptly turned off the tap of public credit. During the Great
Depression, the privately controlled board of the Commonwealth Bank
refused to follow a government directive to issue credit for public
works— a plan to alleviate the 30 per cent unemployment, on the
successful model being applied by U.S. President Franklin D.
Roosevelt. This defiance of government policy, by the board of the
bank, caused such a scandal that in 1936 a Royal Commission was
established to investigate banking in Australia. The commission found
that the government should be the ultimate authority over the banking
system, findings ignored by the Lyons-Menzies governments.

In a 1937 speech to the
Labor Party’s election campaign launch in Fremantle, WA ALP leader
John Curtin reiterated Anstey’s 1921 warning that there could be no
Australian sovereignty without government control over the nation’s
finances. Curtin demanded restoration of the Commonwealth Bank’s
original charter, and that the Bank be freed from the vice of private
financiers and put back under government control:

“If the Government of
the Commonwealth deliberately excluded itself from all participation
in the making or changing of monetary policy it cannot govern except
in a secondary degree.”

In 1939, on the eve of
the war, the aging King O’Malley again went to bat to re-establish
the Commonwealth Bank under its original purpose and charter, as
opposed to its domination and speculative misuse by private fi
nanciers. In his pamphlet Big Battle, O’Malley insisted that the
individual rights people believed were theirs could not be guaranteed
without sovereign control over credit, and that the purpose of
national banking was to facilitate the creation of tangible, physical
wealth, as opposed to the inevitably disastrous “fog wealth” of
private banking speculation:

“Permanent wealth is
produced by the slow process of industry, combined with skill and the
manipulation of capital. Fog wealth is produced by the rapid process
of placing one piece of paper in the possession of a bank as a
collateral security for two pieces of paper. Some of the enormous
quantity of paper which is being created now will sooner or later
collapse. But with the Commonwealth Bank capable of sustaining
legitimate credits, there can come no panic which will again destroy
the market value of intrinsic values, ruin debtors, deprive workers
of work, and produce general distress. Oh! Would that I possessed the
power to arouse the Australian people to the imperative importance of
reviving the Commonwealth Bank!”

After the War

The Commonwealth Bank
was indeed revived by John Curtin and Ben Chifley during and
immediately after WWII, with stunning success. But the British
Crown’s Privy Council overturned Chifley’s bank nationalisation
legislation, which had been passed by both houses of Parliament in
1949, and soon Labor was out of power for the next 23 years. During
that period Prime Minister Sir Robert Menzies, a professed admirer of
Hitler and Mussolini during the 1930s and a notorious lackey of the
anglophile Melbourne financier Sir Staniforth Ricketson, finished off
what was left of the Commonwealth’s function as a national bank.4
He established the Reserve Bank as an independent central bank with
control over the nation’s finances, and appointed as its first
governor a British-educated Fabian, H.C. “Nugget” Coombs. As
Minister of Post-War Reconstruction, Coombs had ripped up most of
Labor’s grand postwar reconstruction plans. He gloated of the
globalist control over banking when he said of himself, “I am a
member of the international freemasonry of central bankers.”

Remnants of a public
credit policy continued to exist in Australia, through the
Commonwealth Development Bank, the Australian Industry Development
Corporation (AIDC), and the various state banks, which enabled the
federal and state governments to direct lending into farming,
manufacturing and small business. In 1981, under the direction of a
cabal of investment bankers centred in Hill Samuel Australia (later
renamed Macquarie Bank), a subsidiary of the City of London’s Hill
Samuel & Co., Ltd., the Committee of Inquiry into the Australian
Financial System (the Campbell Committee) demanded sweeping banking
deregulation, including the elimination of all such public credit
institutions. To its eternal shame, it was the Labor Party, under
Fabian traitors Bob Hawke and Paul Keating, that delivered on the
City of London’s demands upon assuming power in 1983.

Keating deregulated the
banks, exposing Australia to the predations of foreign banks; fl
oated the dollar; amalgamated unions to bust their bargaining power;
annihilated manufacturing by slashing tariffs (to “enhance
competition”); and privatised major public assets, including the
Commonwealth Bank. As revealed in Keating: the Inside Story, by John
Edwards, Keating declared his intention to dismantle every aspect of
the advanced agro-industrial economy that “old” Labor governments
had used public credit to build up, proposing that Australia’s
economic future should be almost solely that of a raw materials
exporter, with whatever shards of manufacturing might manage to hang
on with low or no tariffs: “Minerals, wool and wheat—that’s our
long suit. And we have to make secondary industry competitive.”
Three decades after Keating began this assault on Australia’s
economic sovereignty, his intention for Australia has been realised.